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What Are the Different Types of Human Capital Strategy?

Esther Ejim
Esther Ejim

Human capital strategy simply refers to the methods or strategies that an organization may use to increase its human capital base. Human capital refers to the knowledge and skills possessed by the various employees in the organization. Examples of human capital strategy include actions like the hiring or recruitment of employees, training and developing of employees, borrowing human capital, and acquiring human capital through acquisitions and mergers. This is one of the most fundamental aspects of any organization’s strategic business plan, because the right human capital can often mean the difference between success and failure.

The most common human capital strategy is the initiation of recruitment exercises aimed at identifying desired human capital. Usually, the human resources department of an organization is charged with the responsibility of identifying the manpower requirements in a company, including making projections about the likely future manpower requirements of the organization. Whenever an organization has openings, the human resources department will engage in recruitment drives, which may include advertising the open vacancies, setting interview dates, conducting the interviews, and also following up with the various candidates.

Businesswoman talking on a mobile phone
Businesswoman talking on a mobile phone

Another type of human capital strategy is through the training and further development of existing employees, which is also the responsibility of the human resources department. This method involves features like trainings, personal development courses, seminars and other types of activities aimed at increasing the knowledge and experience of the workers. The increase in the knowledge and experience capital of the various employees will benefit the company through increases in output and a corresponding increase in the rate of production and profit.

Borrowing is a human capital strategy that involves a limited use of the knowledge and expertise of professionals and experts in various related fields. Examples of such a professionals are consultants who simply lend their knowledge to various businesses on a type of contract basis, rather than a long-term association. For instance, an organization may decide to engage the services of an international logistics consultant to help it with its plans to open offices in another country. Such a consultant will use the knowledge and experience capital to help the company scout for the perfect site, research local customs and labor laws, and seek out local business partners. Companies also acquire human capital during mergers or acquisitions by absorbing the best employees from the previous company.

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